FTC settles with Devumi, a company that sold fake followers, for $2.5M – TechCrunch

The U.S. Federal Trade Commission has put an end to the deceptive marketing tactics of Devumi, a company that sold fake indicators of social media influence — like Twitter followers, retweets, YouTube subscribers and views, and more — which was also the subject of a 2018 investigation by The New York Times into the world of social media fraud. The FTC says it reached a $2.5 million settlement with Devumi’s owner and CEO German Calas, Jr., which requires the first $250,000 to be paid, with the rest deferred unless it’s discovered that Calas has misrepresented his financial situation.

According to the Times’ investigation, Devumi had made millions selling fake social media influence to celebrities, businesses or anyone else who wanted to appear more popular online. The company at the time of the report had operated a stock of at least 3.5 million bots (automated accounts), and had sold its customer base over 200 million Twitter followers, combined.

Unlike early and more basic bot armies, Devumi’s accounts were made to resemble real people — they would have the same names, photos, hometowns, and other personal details of real Twitter users, including minors.

The FTC says Devumi wasn’t limited to selling Twitter influence, however. In addition to its website Devumi.com, it also operated TwitterBoost.co, Buyview.co, and Buyplans.co, and sold influence across Twitter, Vine, LinkedIn, YouTube, Pinterest, and SoundCloud.

Its customer base included actors, athletes, musicians, writers, and other social media celebs or high-profile individuals like motivational speakers, law firm partners, investment professionals, and more.

The company had filled more than 58,000 orders for fake Twitter followers, more than 4,000 orders for fake YouTube subscribers, over 32,000 sales of fake YouTube views, and more than 800 fake LinkedIn followers — the latter to marketing, advertising, and PR firms, as well as software companies, banking, investment and other financial service firm, HR firms, and others.

All this allowed the customers to commit deceptive acts and practices, in violation of the FTC Act.

The FTC’s order imposes a fine of $2.5 million against Mr. Calas, representing the amount he was paid by Devumi or its parent company. He must pay $250,000 of that fine and the remaining amount is suspended unless he’s found to have misrepresented his financial status. (Devumi had shut down last year, in the wake of a probe by the NY Attorney General’s office.)

In a similar case, the FTC also took action against Sunday Riley Modern Skincare, LLC (Sunday Riley Skincare) and its CEO, Sunday Riley, which misled consumers by posting fake reviews of the company’s products on a major retailer’s website, at the CEO’s direction. It also failed to disclose that the reviewers were company employees.

The company sold its cosmetics on Sephora, which was where the fake reviews were posted. When Sephora identified the fake reviews as by the company IP address, the employees were directed to use a VPN.

The FTC ordered the company to halt the illegal activity by way of an administrative order but did not fine them. The Commission was more split on this one, voting 3-2 in favor of the Sunday Riley consent order. (The dissenters believed the punishment should have been harsher, and have a monetary component.)

“Dishonesty in the online marketplace harms shoppers, as well as firms that play fair and square,” said Andrew Smith, Director of the FTC’s Bureau of Consumer Protection, in a statement. “Posting fake reviews on shopping websites or buying and selling fake followers is illegal. It undermines the marketplace, and the FTC will not tolerate it,” he said.”